An angry widow fears her home could be repossessed after being presented with a £5,000 tax bill and told to pay nearly half the amount in six days because of a blunder by revenue inspectors.

Janet Fagg, of Walden Way, Tilehurst, said she told Her Majesty’s Revenue & Customs (HMRC) and the Department of Work & Pensions (DWP) about regular changes to her finances.

Mrs Fagg turned 65 in February and was surprised when she received a letter from HMRC asking if she would be drawing a state pension.

She filled in a form and wrote back explaining she had been drawing a pension since she was 60 and also received a British Telecom pension and worked 12 hours a week in a pharmacy.

However, she was shocked when a second letter on November 22 arrived explaining she owed £4,500 in unpaid tax which has now risen to nearer £5,000 and was told to pay half in six days.

Mrs Fagg claims HMRC admitted being informed by the DWP in February 2003 that she was drawing a state pension and this increased to a widow’s pension when her husband died in November 2006.

She further alleges she had kept them informed of changes in her circumstances and had contacted HMRC on at least 15 occasions only to be told there were no notes on her file.

She said: “I have no money. I cannot sell my house in the current economic climate and in any case it is a small terraced house at the bottom of the market so I can’t even downsize.

“I am not prepared to be homeless because of an error on the part of HMRC. I am not a tax expert but do not understand that, despite giving all the correct information to the DWP and HMRC, I have been incorrectly taxed.”

The irate pensioner has since complained to the HMRC Adjudicator’s Office and received a letter last Thursday saying: “We do not have any power to influence the department’s action. Therefore, we will not be able to help you with the demand notice.

“We have requested and are waiting for a report from HMRC. Once we have received that report it may still be several months before your case is allocated to an adjudication officer for review.

"If any tax is owed interest may accrue while we are investigating.”

It added it could not give a definite timescale of when Mrs Fagg’s case will be reviewed.

She said: “They admit they have handled my case improperly and sent £50 compensation. I returned the cheque as I felt it was insulting.

“They say that despite me having no idea how tax is calculated, I should have realised I was not being taxed correctly.

“If I have a rash and see a GP who diagnoses measles and gives me a prescription, I have to trust the GP has made the correct diagnosis and prescribed the correct remedy.

“By the same token if HMRC are given all the correct information by me and the DWP I have to trust they have sent me the correct tax code.”

HMRC spokeswoman Lisa Billard could not comment on individual cases due to taxpayer confidentiality unless it was a matter of public record.

She said: “We are looking into the case and have made contact with the lady concerned abut her private tax affairs to make sure the issues are resolved.

“We always try to help people and the last thing we want to do as a department is cause someone financial hardship.”